Oil companies support emissions rules, downplay costs

DENVER – Representatives of Northern Colorado’s two largest oil companies and the Environmental Defense Fund on Thursday expressed strong support for new emissions rules from the state of Colorado, downplaying concerns others have had about increased costs.

Along with the Washington, D.C.,-based conservation group, representatives of Anadarko Petroleum Corp. (NYSE: APC) and Noble Energy Inc. (NYSE: NBL), the two biggest oil and natural-gas producers in Weld County, helped craft the new rules along with officials from the state Department of Public Health and Environment. The companies and environmental group held a press conference at Noble Energy’s Denver office touting the new rules ahead of rulemaking hearings set to take place next week. Gov. John Hickenlooper announced the proposed rules in November.

“Noble is committed to protection of human health and the environment and these rules are an extension of that commitment for us,´ said Curtis Rueter, environmental manager for Noble Energy. “Having said that, the proposed rules are tough. They establish some new, first-of-their-kind standards for the industry.”

The new rules contain a first-in-the-nation requirement for leak detection from tanks, pipelines and other drilling and production processes, using instruments such as infrared cameras, as well as repair.

Noble Energy and Anadarko representatives said the rules would require additional manpower and resources, but will not burden balances sheets despite an estimated cost of more than $40 million annually statewide.

“We believe these measures are cost-effective and the technology is proven,” spokeswoman Robin Olsen said. “Anadarko knows the industry can thrive under this.”

The rules would reduce oil and gas pollution by more than 90,000 tons of volatile organic compounds, which include methane, and will cost less than $500 per ton of emissions to follow, said Dan Grossman, regional director for Environmental Defense Fund’s Rocky Mountain Office. That translates to a cost of $800 per well annually.

“When you put it in the context of the pollution reductions, it’s incredibly affordable,” he said.

The estimated reductions represent more volatile organic compound emissions than the ones emitted by all cars in Colorado in a year. The state expects the reductions to improve public health by decreasing asthma and other respiratory illnesses.

The proposal comes amid an oil and natural-gas boom in the state driven by production in Northern Colorado’s Wattenberg field. The industry produced 45.2 million barrels of oil and 1.2 trillion cubic feet through the third quarter of 2013, the most recent figures available from the Colorado Oil and Gas Conservation Commission. In 2012, the industry produced 49.4 million barrels of oil and 1.7 trillion cubic feet of gas.

Houston-based Noble Energy plans to invest $2 billion in Northern Colorado this year, up from $1.4 billion last year. Anadarko, based in the Woodlands, Texas, will spend $1.7 billion this year vs. $1.5 billion last year.

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